Hold ONGC, says Sanjay Vaid

Hold ONGC, says Sanjay Vaid, Sr Vice President and Co-Head of Equities, SBI Cap.

Vaid told CNBC-TV18, "We have had 2-3 positive news on ONGC. One was that the oil prices internationally are softening, are stable and the fuel hikes which we are taking will help the under recoveries for most of the upstream companies going forward, so that is one good news."
He further added, "The second is, that the shareholders of Cairn have accepted that the royalty from Rajasthan would be cost recoverable, which is marginally positive for the stock. What we saw especially after the deferment of FPO is that we saw huge short covering happening in the stock on Friday and the open interest fell by almost 22%. The stock has now started to trade above 50 DMA of Rs 274. As long as it is holding above that it can go and retest the higher levels."
"Another thing which is pointing here is that one has to be slightly cautious because 280 call writers are still holding on to their position, so there could be some resistance at around Rs 280 levels. We feel that it can go and test around Rs 286 levels that is in the shorter term but if you want to hold it for longer period of time, we feel that it should easily trade 11 times FY13 EPS and internally we have a target on the stock at around Rs 348. So if you are slightly longer time wait the stock can go towards Rs 350 levels and on the shorter term it can easily go and test Rs 286."
"If the stock starts trading below Rs 274 and head towards Rs 270 I think then probably one should do a stop loss otherwise as long as trading above the Rs 274 levels he/she should hold on to his/her positions."